Risk Management Objectives for Loan Wiz Corporation
According to the Introduction to Risk Management (n.d), the most common objectives of risk management are to identify and prioritize potential risk events, develop risk management strategies and risk management procedure, established risk management methods, find ways to identify and evaluate risks and develop strategies and plans for lasting risk management strategies. Loan Wiz Corporation will operate as a sturdy and superior risk management organization. The main objective of Loan Wiz Corporation is to contribute to substantial risk control strategy through an effective risk management system. The Loan Wiz Corporation objective will allow the risk manager to provide service to the organization in general. The Loan Wiz Corporation major objectives for successful accomplishments are:
Govern risks in a transparent and trustworthy manner as to obtain understating from our stakeholders. The risk objectives, strategic priorities from different governing bodies and the stipulation of ample follow up in a responsible manner will be a key priority for the staffs at the Loan Wiz Corporation.
The Loan Wiz Corporation will promote sustainable growth and resilience through prudent risk management. The company will engage in capital adequacy management and decision making to ensure Loan Wiz Corporation sustainability and resiliency.
Loan Wiz Corporation will develop and maintain a common understanding of risk across several departments of the business units so we can manage risk in a cost effective approach.
Ensure that risk management is a supporter for Loan Wiz Corporation. Provide risk aversion staff assurance on the feasibility for achievement of objectives through risk identification and management.
Ensure that risk management represents a competitive advantage for Loan Wiz Corporation.
Loan Wiz Corporation will develop a detectable and reasonable risk control strategy to facilitate understanding and trust of numerous stakeholders to ensure the sustainability and resiliency of the business model as well as the positioning of risk management.
Major risks exposure of Loan Wiz Corporation
Since Loan Wiz Corporation is a loan company it will be exposed to numerous risks which may come in various forms with different sources under diverse circumstances. The major risks that Loan Wiz Corporation will face include credit risk, interest rate risk, foreign exchange risk, etc.
Loan Wiz Corporation will be exposed to risk of losses due to the failure of its customers to meet its obligations to reconcile outstanding amounts in accordance with agreed stipulations. Credit risk can also disrupt our cash flows and increased the cost of our collection. Credit risk is the most material risk faced by loan companies who engaged mainly in traditional lending activity, in order to help reduce credit risks we will put strategies in place. These strategies consist of examining the new customer record, building long term customer relationships; establish credit limits and the use of insurance. Loan Wiz Corporation will also implement a credit review system to indicate when customer exceeded their loan limits. If the company correctly assess and manage the credit risk, then it will reduce the severity of our loss.
Interest rate risk
The interest rate risk occurs due to potential changes in the market interest rates that adversely affect the value of Loan Wiz Corporation financial assets and liabilities. Interest rate risk may arise from the growth of mismatches of assets, liabilities and repricing activities such as assets and liabilities. We will control interest rate risk by using hedging to create interest rate exposures to offset the company’s business cycle.
Foreign exchange risk
Foreign exchange risks may arise from exposure of Loan Wiz Corporation to the impact of potential fluctuations in the foreign exchange rates. Loan Wiz Corporation will establish and implement a reliable management policy for the movement in the foreign exchange risk. Loan Wiz Corporation will also develop an effective risk management control system as well as implement a foreign exchange risk program to analyze the business operations and identify the foreign exchange risk.
Liability risk is a general insurance risk financing that will able to protect Loan Wiz Corporation from the risk of legal responsibility imposed by lawsuits or a similar claim. The liability risk will protects Loan Wiz Corporation in the event of someone suing the company for claims that come with coverage of an insurance policy. Loan Wiz Corporation will develop a code of ethics that indulged in a legal liability insurance coverage to cover the possibility of risks. Loan Wiz Corporation will also assess possible risk and create a risk management department that is responsible to identify and manage areas in the organization where liability risk is a significant concern.
To help prevent workplace injury Loan Wiz Corporation will ensure that employees are trained to recognize hazards as well as report them to appropriate supervisors or managers so that hazards can be corrected. The company will also ensure that the workplace is monitored in compliance with the standards, rules and regulations in order to maintain safety and prevent fraudulent transactions.
Loan Wiz Corporation will put packages in place for employee benefits such as health insurance, retirement saving plans, dental or vision insurance, life insurance and possibly traditional pension. However, formulating these employees benefit package involves creating an elusive stability between controlling the cost of benefits and keeping employees.
Identify one major and one minor potential crisis faced by the company and outline a crisis management plan
One major potential crisis that Loan Wiz Corporation could face is a natural disaster. A natural disaster crisis includes any environmental occurrence that threatens life, property and the surrounding itself, natural disaster include hurricanes, floods, droughts, landslides and earthquakes. Loan Wiz Corporation will be much vulnerable to hurricanes since we are located in Jamaica. The hurricane season commence on June 1 to November each year. In the case of a hurricane Loan Wiz Corporation will have to close the business until further notice which may result in loss of profits for the company. Any form of natural disasters at Loan Wiz Corporation will not be ignored. The natural disasters will negatively affect the company such as decreasing productivity and damages to infrastructure. Unless Loan Wiz Corporation put strategies in place for the unpredictable natural disasters, then it will be a threat so the company.
Another minor crisis that Loan Wiz Corporation could face is employee misconduct. The person at Loan Wiz Corporation is the core of the company. They are the first element that interacts, builds relationship and promotes the trust of our brand. Any individual worker at Loan Wiz Corporation can brighten a customer day or they will ruin the company reputation. Any employee who breaches the company policy, law or represent the company with ill intent will be acted upon immediately. In addition crisis of Loan Wiz Corporation could entail theft from the customers or other employees, public misconduct that could attract poor publicity.
A crisis management plan is a technique that is used to minimize the potential damage from a crisis as well as eliminating the potential crisis completely; this involves the full organization input. The failure of controlling the risk can greatly impact the business operation and also put the organization at risk if a crisis communication team is not implemented. The parts of the crisis management plan must be linked by a team consist of the Chief Executive Officer, Senior Directors and all the major heads of departments in the organization.
The development and implementation of a crisis management plan involve many steps. The crisis management team should be able to recognize the potential crisis facing the organization and develop an innovative plan to assist in reducing the impact of the crisis. The crisis team is responsible for preparing the plan and meet regularly to test and update it. The team is also in charge of identifying everyone that may be affected by each crisis situation. The crisis team must communicate with employees so they can be prepared in the event that a crisis occurs. Loan Wiz Corporation will prepare media statements, press releases, notification lists and other materials that will help keep the crisis situation under control and calm employees as well as the public who must deal with the crisis situation.
Loan Wiz Corporation will also implement smoke detectors in the case of a fire. The fire may be a minor case, but it would be wise since sensors can detect it. In the case of a fire the employees should vacate the building in an orderly procedure through the emergency exits until the firing unit is knowledgeable about the situation. If there is a major crisis, it is expected of each individual to follow the safety protocols. Therefore, it will be necessary for the staff members to be trained about the safety protocols.
After the crisis the crisis management team should assess how effective their plan was and if it was effective as it should. If not adjustments should be made to survive any occurrence of future crisis.
Introduction to Risk Management (n.d.). Objectives. Retrieved from http://www.ofv.sa.gov.au/__data/assets/pdf_file/0004/8464/risk-management-workbook.pdf